>> welcome to the department of building inspection brown bag lunch. this is a series we run on the -- every month. we talk about topics of general interest. we are going to talk about the subject that comes up when people get permits. and my going to be able to recoup the value of the work to do when a property? how does my improvement or repair affect my property about you? we have guests today. jonathan, thanks for coming. james, and alice. alice is a neighbor. thanks for coming. i have a big hand out of stuff

about what other people think values might be when you do work on your home. san francisco is a different world, isn't it? >> we have so many micro districts and pockets of different the used within two or three blocks. answering the question for one house may not always be the same as answering that question for different house. >> give us an idea. if you get a view, it will be different -- >> shore. the value of a simple remodel verses a very fancy kitchen remodel in a house that might be worth more than a condominium. those things can matter. it can make a difference. >> we have a request from one of our viewers to make sure we talk about -- home-improvement results and building taxes.

>> accessible. >> the other thing that might be brought out his people over- improved. there is a fine line. i recommend that my client or anyone talk to realtors before they start. it is a good idea to get an idea of that neighborhood, that house, and how it can be done. >> page 22 of the handout, spend an hour with the pro. talk about what the value means and how it will add value to your home, or if it will be over spending on something that maybe you can do without. >> exactly. >> it is very important to know why you are doing it. are you doing it to add value? will you live there for 20 years and you want a nicer kitchen? it cost $20,000, but only as

$15,000 in value. it is different than if you want to sell it in three or four years. >> i had a lady who bought a couple of units and wanted my opinion years ago. she had an old victorian with an old brick foundation. she was absolutely convinced that the foundation had to be concrete and had to be concrete tomorrow. it was the first thing she did. she had different people, and look at the way she could do it. someone convinced her she should really be fit up and do it to the degree that she could add another unit or another living space down the line it see -- if she so chose. against my advice, she probably spent over $100,000 on pouring concrete down there. it sits there as an empty shell of a basement, which is sort of useless, really. i think you can get expert opinions from many different

people, and the value question is a different question than an expert opinion on a particular subject. the value question is a question of the value of the property. is it over-improving? sometimes the contractor will tell you otherwise. the value is probably for a salesperson. >> that is something john wrote out. what value? value to you? value to the appraiser who comes in in one month? value is certainly individual. we do see houses, unfortunately, as james as saying, that may be beef up the foundation, but there are so many that just do -- that don't do anything behind the walls, which is an issue for us, that when we go when their -- people buy it, but we have to really make sure the homeowner is aware of both.

>> something else that is a typical misnomer, i think, remodeling my house, doing a quick renovations before i sell it or try to market it might increase its value. not necessarily always, and not necessarily in all instances. one thing that -- you know, there are different levels of that. it is so important to get professional opinions about your true goals to see if your goals for doing a major improvement for a minor improvement on your property, if those goals line up with the market situation, and how best to reach those goals. maybe there are ways to reach those goals for you, in a personal way that may not involve the heavier remodel. >> let me mention a couple of things. people are coming in to replace a profound asians and to other work that they believe is

necessary -- profound foundations and do other work that they believe is necessary. they do things they think should be done that are actually -- where the money could be better spent if their goal is to improve the structural quality of their house. they would have a better improvement curve if they put it in the ground floor or roger area. -- or garage area. >> i see people who have undertaken various remodels without benefit of proper permiting. one of the key questions that is always asked, i would like to have your opinions about, which is, what is the relative benefit to doing work to 1's home prior to sale, with kermit, verses without a permit? is it a good step to take to seek to legalize things that were done in the past that might of been done without a permit? essentially, what percentage of the value added do you get from

your kitchen remodel it you haven't got a permit for? >> are you saying this is already built? they want to know whether they should do the permit or not? >> most often, i find it to be the former. the latter does come up. people do considerate. usually, it is whether you will go back and permit something that was done illegally. >> that is really tricky. it has a lot to do with the expectation of the amount of money they will get for the property. you have to disclose, disclose, disclose in that case. it has happened to me before. it is mainly because you cannot see what is behind the walls. you can tell that to buyers and sellers. buyers should be concerned about what the electrical looks like, where the plumbing is, what is happening to something that has not been permitted.

it could be just fine. owners will tell you that i had my uncle joe do with and he is a plumber and electrician, but we did not want to spend the time and money to do the permit process. that is fine, but it is hard to convince a buyer. it will have an affect on the value, no question. if they want to go to the process, great. i have had sellers require them to go through for a second bath for something that was not permit it. everything was done properly. a contractor owned the house and got it permitted. it was not a big deal. everything was done properly. he could do it. they should find out what the process will take. it they are doing new work, definitely. people are looking at everything. they scrutinized things. if that completion is not on

their, their concern. >> report of residential record, it's basically summarizes what is in the building department records about work that has been done, and required documents that are disclosed from a seller to a buyer. james? >> it is a big topic because everyone knows that -- we used to say 60,000 illegal or unauthorized units in thant of those that exist. people live in them. what does that mean? probably, they were built without a permit, or the use of them is a not-permitted use. it does not necessarily mean that work done to add a room down in a basement behind de garage was done without a permit, but the actual use of the finished space might be a

non-authorized users, non- permitted use. >> you might have -- >> you could have a room downstairs. you could have a sink in the room as a family room with a wet bar, maybe. the city starts getting funny about that kind of thing. it sounds like an illegal unit already. it is not always a bad thing. i would not say that in many instances, legalizing -- "legal" is a strong term. in our business and sales business, we try to avoid that term. it has many implications. to say something illegal is -- to say something is legal or illegal has a lot of implications. we cannot really say. we can say it does permit it or not permit it. what is or is not authorized is a different statement. we have to be mindful. one thing i wanted to say about

jeremy pose a question was, there are quite a few very good people in san francisco to go to if you want to legalize something that had been done without a permit in the past, or you want to get a permit for every model that was done or a bathroom that was added downstairs without a permit, and you feel like your uncle maybe was -- may have done it properly. oftentimes, it is no big deal. it is a good thing to do. there are many companies that specialize in doing just that. you can do that. it depends on your goal. if your goal is to sell the property or to avoid neighbor complete -- there could be two different goals with two different results, choices about how you go about taking care of the bathroom that you built in the basement without a permit, or you might do nothing. that may be ok, too. >> the question was focused related to value. >> ok.

the hypothetical of a kitchen remodel, high-end to remodel that was done without the benefit of permit. what percentage of value are they leaving on the table by selling that without benefit of a permit? >> i think in my experience, which is less than alice in chains, eight times out of 10, in a residential -- which is less than alice and james, eight times out of 10 coming in residential unit, you can convince them it is ok. when there are multiple units involved, or there is an illegal in law, you are dealing with more value issue. a kitchen or bath remodel, in my experience, it does not seem -- people are not as scared of that. >> when you buy the building,

you are buying the problem. you are buying the unit without permits. hopefully, it was disclosed at that time. >> there is one example of a property, a $3 million property, and they had never gotten their completion of it. the other thing i would say, it depends on the marketplace itself. today -- at that moment in time, we got a buyer. they took it without a completion. we disclosed as to why there wasn't. it had to do with the fire escape. the buyers took it on. we were very clear. when it was going to be sold again, two years later, i got a call from the agent to ask me about a property.

we are involved forever, in some cases. they bought it. today, it would be a different story, i think. the other thing about the illegal rooms, if it is obvious to the appraiser -- the appraisal is a big thing for us now. if it looks legal, he might count it as a room. otherwise, he may not count it within the square footage. that could affect the value. but looks legal, he may not go unchecked. no window, someone is calling it a room, there is going to be a question of value. >> another big issue in san francisco, or questions of value with regard to if there is a permit or not done for certain work on a property, has to do with the future of potential and someone's intent to condo-

converted building. that is a big one. there was a two-unit building where a tax was built -- a deck was built without a permit to be used as a recreational deck, but on the building plans that were approved by the department of building inspection, there were the -- there was the deck shown. the railings on the plan around the surface of this roof deck -- there was a staircase to get up to this, but there was no -- so we had a problem because the building inspection that was done for the sale of the property by the buyer indicated that, well, this cannot be permitted roof deck. in digging around a little bit

more, we found that to be true. this is a two-unit building that the buyer intended to apply for a condominium conversion that some point in the near future. that was a big deal for them. what they found out in their search was they would have to remove what was there or find a way to add a second means of egress. that was a $10,000 problem. >> i think any to chip in your. things have changed about second means of redress for homes. only one exit is required for each unit. this created that. >> we go back to their units, my friend rented out, but has never complained about it too many people. what kind of problem could my friend get in this kind of situation? >> [inaudible]

>> there are endless problems you can get into renting an illegal unit. you are an attorney. you want to talk about that? you can leave it open. >> i will leave it open. >> their problems related to the city and planning enforcement, probably related to the tenant, who has rights to implied warranty of have the ability, and all the other things that tenants are deserving -- tenant desert. is the land blurred permitted to collect rent? -- the landlord permitted to collect rent? >> [inaudible] >> that is an excellent point. we will talk about the value. let me say, if it has existed for a long time, that does not make it ok. it means they got away with it for a long time. that does not mean it is ok because it has been there 30, 40, 50, 60, 70, 80 years.

that does not make it ok. >> they can come in and kick up a tenant in clear out all of the room? >> we do not inspect those on a routine basis. we only look at them if we receive a complaint. we do not kick the people out. retell the property owner, you have this problem. you have to figure out how to solve the problem. legalize the unit. they can make some other change. >> anybody can come in and make trouble? >> they can. >> when we go to sell a property like that, if your friend wanted to sell the single-family house and had a tenant in the legal unit, if we write up the statement we hand out to all the people that come in, this has happened a couple of times that we put a legality of the unit on known by the owner and agent, or illegal, that was the term we

used to use, and the neighbors see that, some of them could be angry and call the building department at the time of sale. they can call them for any reason and do it. we have seen that happen. if the city has a problem, they could make it illegal. the owner has to deal with the rent control board because it is difficult to get a tenant out. it is tricky. it is more difficult to sell a property with a tenant in at in a non-permitted unit. the value -- they may be making money on rent, but john can speak to that. >> [inaudible] especially in the sunset area, a single house -- >> it is a big issue. it is a policy issue.

we have up to tens of thousands of these units. they serve an important function. they provide housing. the board provides moderate- income housing. very few of them never been meet the minimum standards for have the ability. they don't. i have been in hundreds of these units. i don't think i have ever in my experience been in a unit that was built without permits that neat -- meets the requirements of the building code, not once. what we have is a double standard of have the ability here. people who meet the code is live on the standards we have agreed upon. people live in units that are not permitted have some lower standard of have the ability. >> it is. i think it is. the tenants pay their own rent, too. >> thank you. i wanted to add my two cents. i have legalized dozens of

dwelling units, illegal units, for people in san francisco. in the last 10 years, there has been a sea change within the bureaucracy, the building and planning departments, where the attitude has been very proactive in trying to help property owners bring things up to code and to save these old, illegal units, rather than force them to be abandoned. the attitude of the city has really changed a lot and people are more likely to get help from their building inspector rather than enforcement. >> what i had hoped we could do is look at this little hand out for further discussion. starting on page one, it is from a website, home remodeling magazine, there is a long list of things supposedly san francisco-based, adjusted for local conditions, and how much of the cost you can expect to recoup for the work you're doing

in the building. if you're doing work because you want to live there and you want to appreciate the improvement, that is different. if you're doing work with a clear eye to how much you can get back, i am shocked to see under the column that says "cost recouped," there's not a single one of these things that says you can get back all of your cost, not one. some of them you get back a lot. most of them you do not do too well. is there anything where you recoup your full cost? golden gate bridge. >> there you go. >> in terms of immediate value, part of this is a function of our limited housing supply, really. that affects the value, of course. if you do a bathroom remodels, they are saying the job cost $18,000, you might recoup $15,000. the hard part in determining that, to compare apples and

apples, is to look at a house in the sunset district with a single-family home with one bath, or is it a 3-bedroom condominium in the castro where maybe everything else is really done fairly recently and updated nicely, but maybe the bathrooms never got updated? that would probably change dramatically the resale they'll -- value on that universes' the house in sunset. these are wild figures. we have to go to seek professional advice with the intent of satisfying your goal, whatever your goal would be. this is a question when representing sellers that we get all the time. it should i do this or that? you really need somebody that is in the industry to come with you and go through and say, don't do that, but painting this would be great, but don't put in a new

counter in the bathroom or kitchen. it is item by item, neighborhood by neighborhood. sometimes, sellers are under the impression that if they agreed to the kitchen, that will add more value than they spent. oftentimes, it is the case that the buyer will not want what you as a seller chooses. in fact, it is a detriment. sometimes it will turn buyers away. it is already begun. i don't want to tear it out. i don't want to pay for someone else's remodel. a lot of times, money well spent is an old adage, but things -- just selling a house, paint is the best thing you can do. >> pete is the number one thing. it really is. >> i sold my own house a few years ago when the interesting thing was that of a beloved my house.

ever the love that. i said, it it is not exactly in of -- everybody loved it. i said, it is not exactly universal. we had a 50's kitchen. we had a second garage. we put in storage. we always wanted to redo the kitchen. that was the main thing. people say, i love the kitchen. we sold that without redoing the kitchen. we made more money than we thought we ever could. they loved the kitchen. we separated the appliances and painted the whole thing. we did all the things around it. we made sure there was storage, and parking. all of the things that that was one thing that was not on, for somebody who would like to have it your personal, the kitchen, particularly, do it -- do everything else. that was a very big lesson in some ways. i thought the value would be

taken away for that. it was not. >> that is a good point. you are right. especially if you -- did you do a countertop change at all? you didn't. you did appliances. >> yellow. >> new appliances can help a lot. especially today, the cost of competitive prices are pretty good and you can make those changes for $3,000, $4,000, $5,000. they're oftentimes more energy- efficient. the general consensus is people like that. one other thing that i think is overlooked in terms of value, and i don't know of the survey talks about it, is landscaping and plants. lance camping, plants, and trees are really inexpensive compared to major remodels. i often feel it is something that is heavily overlooked. it as a lot of value.

it is a touchy-really, emotional part of a property. oftentimes, we don't have front yards. maybe there should be a tree out front. maybe you should have potted plants lining the stairs going up. perhaps the rearguard in, although you never use it, doesn't matter if you don't get sunshine. plant flowers that do not need son. those are oftentimes good ways to spend money on adding value to your home. >> people that are selling their homes do need to have someone that will absolutely come in. i had a stager come in my house. you need to have another i that will absolutely have you get rid of the little things that you think make it look homey and people love it, but the value -- there is a very big value here. it is the same thing as the

fluff, but it isn't fluff. paint, or anything else. >> let's talk about staging and what that does. i see a trend toward more staging. what is staging and how important is it? >> staging is when, in the new property or a vacant property, we bring in furniture. it can also be the property you have that is your home, removing your furniture and bringing in someone else's. the goal of staging is to create a neutral, audience-neutral environment where the buyer can imagine themselves without detracting by having your personal photographs on the walls or your grandmother's throw on the couch. you will notice that it is often neutral tones, nothing too dramatic, not very dramatic art. it is kind of like being in a hotel room.

we have actually seen staging in some properties -- in some, it is still prop -- popular. in some markets, it is not even necessary on some properties. >> i think they are getting a little more daring with color. there is some color. because it is expensive -- if you get a stager that can use your furniture in your things, but just at it, as they say, and as james said about the landscaping, that is so important. you cannot leave your kids bikes. it is a whole thing. >> i ride my bike to work. i was riding to work and i saw someone had just repainted their front door. it was a beautiful yellow with a little orange in it. i was thinking, that did not cost very much, and now their house